Cooperatives Values and economic and monetary integration: the case of banking regulation

Within the framework of the economic and monetary integration, the creation of a unique model of banking supervision implemented by the ECB (EUROPEAN CENTRAL BANK) raises) a number of interrogation as for the supervision of the financial institutions which are of very diverse nature in Europe. In particular the cooperative sector occupies an important place both in number of customers and in terms of size there of the balance sheet. The difficulty comes because the European financial regulation in banking does not seem to take into account specificities and values carried by cooperatives. Besides cooperatives have to obey to a specific regulatory framework which often enters in conflict with the banking regulation. The purpose of this workshop thus is to discuss and evaluate these difficulties: Does and how financial cooperatives are really impacted? On which topics do they have real difficulties to adapt their organization and structure? How to combine compliance with new regulation and cooperative difference?

Organization of discussion

Four short panels will introduce each topic in order to initiate discussion. Each panel will be facilitated by members of Labex ReFi and the Chair from Sorbonne Graduate Business School on the management and governance of financial cooperatives. The four topics are :

The compatibility of the banking regulations with the regulations and the cooperative commitment

The consequences of the banking regulation on the organization of the financial cooperatives

The consequences on the capitalization and the strengthening of the stockholders’ equity of the financial cooperatives

The consequences on the practices of governance of the financial cooperatives

Each panel will have 45 minutes – 3 panelists by panel – Pitch 10 minutes by panelist – 15 minutes discussion and debate with participant of the workshop.

Introductive speech:

What are the values hold by financial cooperatives and consequences for the business model? Democratic governance, local involvement, decentralized decision process…

Panel 1 : The compatibility of the banking regulations with the regulations and the cooperative commitment

The object of the first panel is to discuss main orientations of the European banking integration through the regulation on the bank stability and the control of the risks. What are the motivations of this regulation? Does it take into account specificities and existing specific regulation for cooperatives? In what domains are these conflicts of regulation the most problematic for cooperatives?

Panel 2: The consequences of the banking regulation on the organization of the financial cooperatives

One of the first consequences of the regulation is to bring the financial cooperatives to centralize a number of decisions regarding control and regarding risk management banking. This centralization imposes an evolution regarding internal functioning at the level of control processes, at the level of respect for the conformity and for the quality of the data of risks. In what it affects the organization decentralized of cooperatives? How it affects their decisions?

Panel 3: The consequences on the capitalization and the strengthening of the stockholders’ equity of the financial cooperatives

In a context where the regulations ask for a strengthening of stockholders’ equity and liquidity of cooperatives and that the mechanism of the bail in is being set up, how have to react cooperatives? In what the relations with the members can be affected and which is their real capacity to raise stockholders’ equity? Which are the devices of solidarities set up within the cooperative groups?

Panel 4 : The consequences on the practices of governance of financial cooperatives

Regarding the changes discussed in the three previous panels, the structures of governance are requested more and more to participate in the decisions regarding management of risk, supervision of internal control and the follow-up of the activity. It is thus necessary that the expertise of members of the board is strengthened and sufficient to challenge the management and really to contribute to the decisions. In a context of democratic governance based on “one man one vote” principle can we select boards of directors having capabilities to insure these missions? The requirements regarding “Fit and proper” regulation they do can develop the modes of constitution of the board ?

Organized by Dominique Guégan, University of Paris 1 (Bio & CV) and LabEx ReFi head of the FinTech research Group Risks and fintech (CO738) Location: Senate House, University of London Forecasting inflection points: Hybrid methods with machine[...]